The Dow Jones Industrial at the close was up 0.41 percent to 39,331.85 points. The S&P 500 was up 0.62 percent to 5,509.01 points. The Nasdaq Composite was up 0.84 percent to 18,028.76 points. The Russell 2000 mid-cap index was up 0.25 percent to 2,035.30 points. The VIX volatility indicator was down 1.55 percent to 12.03 points.
“We want to have greater certainty that inflation will decline permanently”
“We continue to see the US economic exceptionalism weakening somewhat. In particular, there has been growing tension among US consumers, while US labour market tensions have eased. Our base case continues to see two rate cuts in 2024, with the first cut expected in Q3,” OCBC analysts said.
The risk of a near-term pullback is rising after the S&P 500 surged 14% in the first half of the year, according to RBC Capital Markets strategists led by Lori Calvasina. But they still expect big tech stocks to outperform. RBC Capital Markets raised its year-end target for the S&P 500 to 5,700 from 5,300.
Federal Reserve Chairman Jerome Powell on Tuesday welcomed significant progress in the fight against inflation, but said he wanted to see more before he was confident enough to start cutting interest rates. “We’ve made a lot of progress and brought inflation back to our goal,” Powell told a central bank forum in Sintra, Portugal.
“The latest inflation reading and the one before it suggest to a lesser extent that we are returning to a disinflationary path. We want to have greater certainty that inflation will fall permanently towards 2% before we begin the process of reducing or loosening monetary policy,” he added.
Powell sees progress in the fight against inflation but worries about moving too soon and endangering the downward path of price growth, which two years ago reached its fastest pace since the early 1980s. “We are acutely aware that if we move too soon, we can undo the good work that we have done. If we move too late, we can unnecessarily undermine the economic recovery and the expansion,” he said.
Risky pattern in Nvidia’s recent performance
At the beginning of this year, markets were expecting at least six Fed rate cuts of a quarter percentage point each. Since then, market prices have adjusted to predict two cuts, one in September and another before the end of the year. But members of the rate-setting Federal Open Market Committee proposed only one at their June meeting.
The number of unfilled jobs in the US, according to the JOLTS survey, in May was 8.14 million, compared to 7.919 million recorded a month earlier, revised from 8.059 million. The number of vacancies was expected to be 7.95 million. The JOLTS survey includes vacancies that the employer itself (without intermediaries) actively seeks to fill. The indicator includes vacancies for full- and part-time positions, vacancies for permanent and short-term contracts, and vacancies for seasonal work.
Tesla shares rose 9%, after rising 6% on Monday after reporting better-than-expected second-quarter electric vehicle deliveries. Nvidia shares fell 1.3% as investors wondered whether the AI fad favorite could continue its big year. The company’s shares are up about 146% in 2024.
“The risky pattern in Nvidia’s recent performance is concerning in the sense that it has increased volatility, but it has also allowed investors who missed the initial bullish trend to enter the market,” said Quincy Krosby, chief global strategist at LPL Financial. “However, if the volatility in the chipmaker and other big tech names continues, it could signal the market is recalibrating toward a rotation,” he added.
Drugmaker Eli Lilly fell 0.6%. Paramount Global rose nearly 6% after media reported that billionaire Barry Diller’s digital media conglomerate IAC was considering a takeover of the company. Atlassian rose 2% after Piper Sandler raised its rating on the enterprise software maker’s shares to “overweight” from “neutral.” CrowdStrike Holdings fell nearly 2% after Piper Sandler lowered its rating on the cybersecurity company’s shares to “neutral” from “overweight.”
Polestar Automotive Holding shares fell 5% in the U.S. after the electric vehicle maker reported an operating loss in the first quarter. In the oil market, WTI contracts for August fell 0.40% to $83.05 a barrel, while August Brent futures fell 0.14% to $86.47 a barrel.
